Condo construction continues its torrid pace in Toronto as a record 6000+ units sold in the first quarter of 2012. With the rise in the number of development projects comes the risk of a growing number of unsold condo units, which some fear could contribute to a housing burst.

But the chief executive officer of real estate developer Diamondcorp is unfazed. He believes the government should change tax incentives to encourage developers to build more 3-bedroom condos. The result wold be a much needed drop in house prices for single family homes. He says, “If we did that, then I don’t think there’s any bubble in the city of Toronto at all, because we need to accomodate the population.”

Women more likely to be first-time homebuyers in next two years – News Wire

According to the 19th Annual RBC Homeownership poll, 49% of women are more likely to be first-time home buyers compared to 35% of men. Overall, 51% of women and 65% of men who are likely to buy in the next two years already own a home. Women are said to be more cautious than men when it comes to home-buying. They consider costs, affordability and job security as the main items of deliberation before buying a home. Fixed mortgages remain the preferred option for both men and women who want to lock in the rates of today’s low rate environment.

While condo construction surges in Toronto, the building of single-family homes has been lagging, driving their prices upwards as supply can not meed demand. This could lead to Toronto home prices ballooning to Vancouver heights within a few year. In Vancouver, the typical detached home sells for over $1 million, although the market is showing signs of cooling. In Toronto, the average home price hit $568,436 in April while detached single-family homes practically doubled in the last decade to $831,214, according to Toronto Real Estate Board figures. Single-family homes are experiencing a dramatic inflation of prices with demand exceeding supply.

Toronto is entering the five-star luxury hotel condominium game with a vengeance. By the end of summer 2012, the city will have four new five-star hotels: the Four Seasons, Ritz Carlton, Trump and the Shangri-La. However, not one of the four projects have sold out their million-dollar condos. Developers are pushing hard to sell the remaining units before the resale market begins.

The Trump project has the largest portion of unsold units when compared to its competitors despite being the first to open its sales office in 2004. Disgruntled Trump buyers are complaining that the monthly costs are too high, or they realized too late that they had overpaid or can’t finance.

Canadians are starting to reduce their household debt – and it shows! Consumer credit is crawling at the slowest pace since the early 1990s, while the mortgage market shows early signs of moderation. Total household credit, including consumer and mortgage debt, is rapidly decreasing at just over 5% — its slowest pace since 2002.

There are sharp differences in housing sales between Toronto and Vancouver. CREA reports that Vancouver sales fell 13% while Toronto jumped 14%. Both provincial numbers skewed the national average of home sales higher, largely due to Vancouver’s pricy high-end home sales and Toronto’s hot housing market. Home sales rose 11.5% in April since 2011, whereas prices gained modestly nationally with slower activity in Vancouver. The average residential selling price in Vancouver fell nearly 10% from 2011 to $735,315, wheras the average price in Toronto rose 8.4% to $517,556.

A recent survey conducted by the Bank of Montreal finds that 51% of Canadian homeowners plan to carry their mortgage through their retirement years. A new overlooked trend finds people are moving into more expensive upscale homes after retirement. With the average home price hitting $372,608 in April, is it safe to retire with your mortgage? Ms. Tino Di Vito, head of the BMO Retirement Institute believes that “carrying debt into retirement is a threat to financial security.” She goes on to say that “Canadians need about 70% of their pre-retirement income to maintain the same lifestyle.”

Statistics Canada reports half of homeowners aged 50 to 59 still have mortgage debt. By 60 to 69, 25% of Canadians will still have a mortgage to pay off. If those numbers might seem a little high, consider a staggering 60% of B.C. homeowners expect to take their mortgage debt into retirement.

Canada banks aren’t immune to potential collapses triggered by falling house prices. Vlasios Melessanakis, manager of policy development at the Office of the Superintendent of Financial Institutions says that “Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.” She goes on to say that “the market may break because the [overvaluation of homes] are not sound, not because of OSFI guidance.” Previous failures of Canadian financial institutions were due to poor real estate lending and sharp drops in housing prices.

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